When does profit maximization occur?
A)when total costs equals average fixed revenue
B)when average variable costs are larger than average total costs
C)when marginal variable costs equal average revenues
D)when marginal revenue equals marginal cost

Question

Quizplus · Accepted Answer

Profit maximization occurs when the marginal revenue (the additional revenue generated by selling one more unit) equals the marginal cost (the additional cost incurred in producing one more unit). At this point, the profit is maximized as any further increase in production will result in a decrease in profit.

When Does Profit Maximization Occur